SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
August 24, 2000
(Date of Report)
VIS GROUP HOLDINGS, INC.
(Exact name of Registrant as Specified In Its Charter)
DELAWARE 1-13315 11-3347585
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
900 Old Country Road, Garden City, New York 11530
(Address of Principal Executive Offices)
(Zip Code)
(516) 222-3000
Registrant's telephone number, including area code:
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
Not applicable
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 9, 2000, Avis Group Holdings, Inc. ("Avis") and BNP
Paribas ("BNP"), the largest listed banking group in France,
established a joint venture company in the United Kingdom,
Arval PHH Holdings into which Avis contributed the stock of
its vehicle lease, vehicle management and fuel card
subsidiaries in Europe under the PHH name ("PHH Europe"). As
part of the negotiated transaction, Avis received from BNP
$800 million in cash plus settlement of inter-company
indebtedness owned to Avis by PHH Europe and a 20% interest in
the venture. In return, BNP received an 80% controlling
interest in the venture company, which within one year, will
merge with Arval Service Lease, the vehicle lease and vehicle
management subsidiary of BNP which operates in thirteen
countries in Europe.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Not applicable
ITEM 5. OTHER EVENTS.
Not applicable
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS.
Not applicable
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
Reference is made to the News Release of Avis Group Holdings,
Inc. and the unaudited pro forma consolidated financial
statements filed as Exhibits hereto, which information is
incorporated herein by reference.
ITEM 8. CHANGE IN FISCAL YEAR.
Not applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AVIS GROUP HOLDINGS, INC.
(Registrant)
Date: August 24, 2000 By: /s/ Kevin M. Sheehan
--------------------
Kevin M. Sheehan
President-Corporate and Business Affairs
and Chief Financial Officer
(principal financial officer)
EXHIBIT INDEX ITEM 7
7a) News Release of Avis Group Holdings, Inc. dated August 10, 2000.
7b) Unaudited pro forma consoldiated financial statements
ITEM 7: Exhibit 7a
CONTACTS:
Elizabeth Logler - Investor Relations
516-222-4795
Gregory Faulhaber - Media Relations
516-222-3876
AVIS GROUP CLOSES JV TRANSACTION; RETIRES $1 BILLION TERM DEBT; AND ANNOUNCES
STOCK REPURCHASE PROGRAM
GARDEN CITY, NEW YORK, AUGUST 9, 2000-Avis Group Holdings, Inc. (NYSE:AVI)
announced today the following major initiatives that reflect the Company's
continued effort to build value for its shareholders:
o Avis Group received $800 million in cash plus settlement of
inter-company indebtedness from the closing of its joint venture
transaction with BNP Paribas. Avis will retain a 20% stake in the
global alliance, creating one of the world's leading vehicle management
solutions brands in North America and Europe.
o With the proceeds from its accretive alliance with BNP Paribas, Avis
Group has retired all of the Company's outstanding term debt that was
borrowed to fund the original VMS transaction. The elimination of the
$1 billion term debt dramatically improves the Company's financial
leverage and minimizes its exposure to interest rate changes. The
remaining non-fleet obligations will consist of the $500 million senior
subordinated notes, $380 million preferred stock and the Company's
revolving credit facility.
o Avis Group's Board of Directors has authorized the Company to
repurchase up to $100 million of its common stock. Currently, there are
31.3 million shares of Avis Group issued and outstanding. This share
repurchase initiative will be funded with ongoing cash flow from
operations. The timing and amount of share repurchases will be subject
to market and business conditions.
Avis Group Holdings, Inc. is one of the world's leading service and information
providers of comprehensive automotive transportation and vehicle management
solutions. Avis Group operates the second largest general-use car rental
business in the world, with locations in the United States, Canada, Australia,
New Zealand and the Latin American Caribbean region. In 1999, the Company
acquired PHH Vehicle Management Services, the world's second largest fleet
management and leasing company, together with Wright Express, the world's
largest fleet card provider.
This press release contains statements related to future results, which are
forward-looking statements that are made pursuant to the Safe Harbor Provisions
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve risks and uncertainties, including the impact of competitive
products and pricing, changing market conditions; and other risks which are
detailed from time to time in the Company's publicly-filed documents, including
its Annual Report on Form 10-K for the period ended December 31, 1999. Actual
results may differ materially from those projected. These forward-looking
statements represent the Company's judgments as of the date of this release.
ITEM 7: EXHIBIT 7b
AVIS GROUP HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial statements (the
"Unaudited Pro Forma Consolidated Financial Statements") have been derived by
the application of pro forma adjustments to the historical consolidated
financial statements of Avis Group Holdings, Inc. ("Avis"). The unaudited pro
forma consolidated statements of operations for the six month period ended June
30, 2000 and for the year ended December 31, 1999, give effect to the formation
of the U.K. Joint Venture (as described below) as if it had occurred on January
1, 2000 for the six months ended June 30, 2000 and June 30, 1999, the date of
the acquisition of the VMS Acquisition (described below), for the year ended
December 31, 1999. The unaudited pro forma statement of financial position as of
June 30, 2000 gives effect to this transaction as if it had occurred on such
date. The pro forma adjustments are described in the accompanying note to the
Unaudited Pro Forma Consolidated Financial Statements.
The Unaudited Pro Forma Consolidated Financial Statements give effect to:
o The contribution of all the stock of PHH Holdings Ltd. and assets of PHH
Deutschland to the newly formed Arval PHH Holdings(the "U.K. Joint
Venture"). Avis originally purchased PHH Holdings Ltd. and PHH Deutschland
(collectively "PHH Europe"), PHH North America and Wright Express LLC
("WEX"), on June 30, 1999(the "VMS Acquisition").
o The receipt of $800 million from Banque National de Paris ("BNP Paribas") on
August 9, 2000 for an 80 percent interest in the U.K. Joint Venture.
o The repayment to Avis of intercompany indebtedness, from the U.K. Joint
Venture.
o The receipt of a annual license fee from the U. K. Joint Venture for the
license of the PHH fleet management technology, PHH interactive.
o The receipt of a distribution from the U.K. Joint Venture, and
o Theutilization of the above proceeds to reduce Avis' indebtedness and
pay transaction costs.
Collectively, the above transactions are referred to as the Transaction. Any
difference between the carrying value of the net assets of PHH Europe and the
receipt of $800 million in cash plus settlement of intercompany indebtedness
from BNP Pairbas is accounted for as an adjustment to cost in excess of net
assets acquired relating to the VMS Acquisition.
The Company believes that the accounting used to reflect the above
transactions provides a reasonable basis on which to present these Unaudited Pro
Forma Consolidated Financial Statements. The pro forma consolidated statement of
financial position and pro forma consolidated statements of operations are
unaudited and were derived by adjusting the historical financial statements of
Avis. The Unaudited Pro Forma Consolidated Financial Statements are provided for
informational purposes only and should not be construed to be indicative of the
Company's consolidated financial position or results of operations had the
Transaction been consummated on the dates assumed and do not project the
Company's consolidated financial position or results of operations for any
future date or period. The Unaudited Pro Forma Consolidated Financial Statements
and accompanying notes should be read in conjunction with the Company's audited
annual report and the notes thereto, included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999, quarterly reports as of March
31, and June 30, 2000 and the current report on Form 8-K, dated July 14, 2000
filed with the Securities and Exchange Commission.
AVIS GROUP HOLDINGS, INC.
UNAUDITED PRO FORMA STATEMENT OF FINANCIAL POSITION
AS OF JUNE 30, 2000
(In thousands)
Historical Pro Forma
Avis Group Avis Group
Holdings, Inc. Pro Forma Holdings, Inc.
June 30, 2000 Adjustments June 30, 2000
----------------- --------------- -----------------
ASSETS
Cash and cash equivalents.............................. $ 151,114 $ (66,946) (1) $ 84,168
Cash held on deposit with financial institution........ 143,610 143,610
Restricted cash........................................ 243,952 243,952
Accounts receivable, net............................... 681,150 681,150
Assets held for sale, net.............................. 869,222 (869,222) (2)
Prepaid expenses....................................... 62,222 62,222
Finance lease receivables.............................. 176,916 176,916
Vehicles, net - rental................................. 4,148,989 4,148,989
Vehicles, net - leasing................................ 3,053,234 3,053,234
Property and equipment, net............................ 182,567 182,567
Other assets........................................... 104,797 104,797
Investment in U.K Joint Venture........................ 167,000 (3) 167,000
Cost in excess of net assets acquired, net............. 1,240,826 31,008 (4) 1,271,834
----------------- --------------- -----------------
Total assets........................................... $ 11,058,599 $ (738,160) $ 10,320,439
================= =============== =================
LIABILITIES, PREFERRED STOCK AND
STOCKHOLDERS' EQUITY
Accounts payable....................................... $ 530,500 $ 32,142 (5) $ 562,642
Accrued liabilities.................................... 354,160 354,160
Due to affiliates, net................................. 76,659 76,659
Current income tax liabilities......................... 20,012 20,012
Deferred income tax liabilities, net................... 161,057 260,000 (6) 421,057
Public liability, property damage and other insurance
liabilities, net........................... 257,477 257,477
Vehicle debt........................................... 7,006,064 (61,137) (7) 6,944,927
Acquisition debt....................................... 1,491,500 (991,500) (7) 500,000
Minority interest (preferred membership interest)...... 99,305 99,305
----------------- --------------- -----------------
Total liabilities...................................... 9,996,734 (760,495) 9,236,239
----------------- --------------- -----------------
Commitments and contingencies
Preferred stock:
Class A Preferred stock .............................. 360,000 360,000
Class B Preferred stock............................... 18,225 18,225
Class C Preferred stock............................... 2,000 2,000
-----------------
-----------------
Total Preferred stock............................... 380,225 380,225
----------------- -----------------
Common stockholders' equity:
Class A Common stock ...................................... 359 359
Additional paid-in capital............................. 593,199 593,199
Retained earnings...................................... 223,373 223,373
Accumulated other comprehensive loss................... (31,459) 22,335 (8) (9,124)
Treasury stock ........................................ (103,832) (103,832)
----------------- --------------- -----------------
Total common stockholders' equity...................... 681,640 22,335 703,975
----------------- --------------- -----------------
Total liabilities, preferred stock and common
stockholders' equity................................ $ 11,058,599 $ (738,160) $ 10,320,439
================= =============== =================
See notes to the unaudited pro forma consolidated financial statements.
AVIS GROUP HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(In thousands, except share nd per share data)
Pro Forma
PHH Avis Group
Avis Group Europe Holdings, Inc.
Holdings, Inc. For the For the
For the Six Six months Six months ended
Months Ended Ended Pro Forma June 30,
June 30, 2000 June 30, 2000 (9) Adjustments 2000
-------------------- -------------------- ----------------- --------------------
Revenue:
Vehicle rental.................. $ 1,255,473 $ 1,255,473
Vehicle leasing................. 707,158 $ (62,412) 644,746
Other fee based revenue........ 146,870 (73,511) 73,359
-------------------- -------------------- --------------------
2,109,501 (135,923) 1,973,578
-------------------- -------------------- --------------------
Costs and expenses:
Direct operating, net........... 456,008 $ (2,818) (10) 453,190
Vehicle depreciation and lease
charges, net................. 827,502 (20,255) 807,247
Selling, general and
administrative............... 366,275 (48,019) 318,256
Interest, net................... 305,994 (30,942) (49,918) (11) 225,134
Equity in net earnings of U.K
joint venture................. (2,437) (12) (2,437)
Non-vehicle depreciation
and amortization............. 26,459 (6,935) 19,524
Amortization of cost in excess of
net assets acquired.......... 23,594 (2,959) (2,988) (13) 17,647
-------------------- -------------------- ----------------- --------------------
2,005,832 (109,110) (58,161) 1,838,561
-------------------- -------------------- ----------------- --------------------
Income before provision for
income taxes................... 103,669 (26,813) 58,161 135,017
Provision for income taxes........ 46,651 (7,548) 21,517 (14) 60,620
-------------------- -------------------- ----------------- --------------------
Net income........................ 57,018 (19,265) 36,644 74,397
Preferred stock dividends......... 9,335 9,335
Earnings applicable to common -------------------- -------------------- ----------------- --------------------
stockholders................... $ 47,683 $ (19,265) $ 36,644 $ 65,062
==================== ==================== ================= ====================
Earnings per share:
Basic.......................... $ 1.53 $ 2.09
==================== ====================
Diluted........................ $ 1.52 $ 2.08
==================== ====================
Basic weighted average shares
outstanding.................... 31,131,712 31,131,712
==================== ====================
Diluted weighted average shares
outstanding.................... 31,339,247 31,339,247
==================== ====================
See notes to the unaudited proforma consolidated financial statements.
AVIS GROUP HOLDINGS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,1999
(In thousands, except share and per share data)
Pro Forma
Avis Group PHH Avis Group
Holdings, Inc. Europe for Holdings, Inc.
For the The period For the
Year ended July 1, 1999 Year ended
December 31, to December 31, Pro Forma December 31,
1999 1999 (9) Adjustments 1999
------------------- ------------------- --------------- ------------------
Revenue:
Vehicle rental.............. $ 2,500,746 $ 2,500,746
Vehicle leasing............. 692,935 $ (63,118) 629,817
Other fee based............. 139,046 (76,281) 62,765
------------------- ------------------- ------------------
3,332,727 (139,399) 3,193,328
------------------- ------------------- ------------------
Cost and expenses:
Direct operating, net........... 957,270 $ (2,818) (10) 954,452
Vehicle depreciation and lease
charges, net.................. 1,174,509 (24,211) 1,150,298
Selling, general and
administrative................ 582,056 (41,840) 540,216
Interest, net................... 388,193 (29,509) (46,968) (11) 311,716
Equity in net earnings of U.K.
joint venture................. (4,778) (12) (4,778)
Non-vehicle depreciation and
amortization.................. 34,600 (5,473) 29,127
Amortization of cost in excess
of net assets acquired........ 30,182 (3,018) (2,988) (13) 24,176
------------------- ------------------- ------------------- -------------------
3,166,810 (104,051) (57,552) 3,005,207
------------------- ------------------- ------------------- -------------------
Income before provision for
income taxes.................. 165,917 (35,348) 57,552 188,121
Provision (benefit) for income
taxes......................... 73,332 (4,379) 21,280 (14) 90,233
------------------- ------------------- ------------------- -------------------
Net income...................... 92,585 (30,969) 36,272 97,888
Preferred stock dividends....... 9,110 9,110
------------------- ------------------- ------------------- -------------------
Earnings applicable to common
stockholders.................. $ 83,475 $ (30,969) $ 36,272 $ 88,778
=================== =================== =================== ===================
Earnings per share:
Basic......................... $ 2.66 $ 2.83
=================== ===================
Diluted....................... $ 2.61 $ 2.78
=================== ===================
Basic weighted average shares
outstanding................... 31,330,536 31,330,536
=================== ===================
Diluted weighted average shares
outstanding................... 31,985,569 31,985,569
=================== ===================
See notes to the unaudited pro forma consolidated financial statements.
AVIS GROUP HOLDINGS, INC.
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share data)
(1) Reclassification of PHH Europe cash to Assets Held
for Sale, net................................................ $ (67,338)
Remainder of proceeds from Transaction after debt
repayment and payment of Transaction cost.................... 392
---------------
$ (66,946)
===============
(2) To reflect contribution to the U.K Joint Venture consisting of:
- Assets ...................................................... $ 1,895,122
- Liabilities ................................................. 1,025,900
---------------
- Assets Held for Sale......................................... $ 869,222
===============
(3) To record the Avis investment in the U.K Joint Venture........... $ 167,000
===============
(4) To reflect changes in cost in excess of net assets acquired,
net:
Proceeds received, net of closing costs paid at closing.......... $ (1,053,029)
---------------
Less:
- Assets Held for Sale, net ................................... 869,222
- PHH Europe cash reclassified to Assets Held for Sale,
- PHH Europe accumulated comprehensive loss
reclassified to Assets Held for Sale, net .................. 22,335
- 20% investment in U.K. Joint Venture, retained .............. (167,000)
---------------
- Adjusted Assets Held for Sale, net .......................... 791,895
- Closing and other Transaction costs ......................... 32,142
- Deferred income tax liability................................ 260,000
---------------
- Adjustment to cost in excess of net assets acquired, net $ 31,008
===============
(5) Represents accruals for:
- Transaction costs, net of closing costs paid at closing...... $ 30,738
- Deferred fleet management technology income................. 1,404
---------------
$ 32,142
===============
(6) To record deferred income tax liability arising from
the receipt of $800 million in connection with the formation
of the U.K. Joint Venture (PHH Europe) ..................... $ 260,000
===============
(7) Reflects the repayment of debt with the Transaction proceeds:
- Pay down of the revolving credit facility ................... $ (61,137)
===============
Retirement of acquisition debt:
- Term Loan A due June 2005.................................... $ (242,500)
- Term Loan B due June 2006.................................... (374,500)
- Term Loan C due June 2007 ................................... (374,500)
---------------
Total acquisition debt retired............................... $ (991,500)
===============
(8) To record reversal of accrued accumulated comprehensive loss
on foreign currency translation, intercompany loans
and the related tax effect................................... $ 22,335
===============
(9) Represents the adjustment to remove the results of operations
of PHH Europe for the period July 1, 1999 to December
31, 1999 and for the six months ended June 30, 2000.
(10) To record the fleet management technology fee income
for the period July 1, 1999 to December 31, 1999
and for the six months ended June 30, 2000.
(11) To record the interest reduction as a result of the retirement
of Term Loans A, B, and C totaling $991.5 million, and the
paydown of the revolving credit facility of $61.1 million as
ollows:
Interest Expense
-------------------------------------------------------
July 1, to Six months
Average December 31, Average Ended
Rates 1999 Rates June 30, 2000
---------- ------------- ----------- ---------------
Principal
Term Loan A $ 242,500 8.67% $ 10,518 9.24% $ 11,203
Term Loan B 374,500 8.94% 16,741 9.53% 17,844
Term Loan C 374,500 9.19% 17,202 9.62% 18,013
------------- ----------- ---------------
44,461 47,060
Revolving Credit Facility 61,137 8.20% 2,507 9.35% 2,858
========= ------------- ---------------
Total interest adjustment $ 46,968 $ 49,918
============= ===============
July 1, 1999
to January 1,
December 31, 2000 to
1999 June 30, 2000
--------------- ---------------
(12) To record equity in net earnings of the U.K. Joint Venture as
follows:
Net income for PHH Europe...................................... $ 30,969 $ 19,265
=============== ===============
Avis 20% equity in earnings, net of amortization of cost in
excess of net assets acquired.............................. $ 4,778 $ 2,437
============== ===============
June 30,
2000
--------------
(13) To adjust for decrease in amortization of cost in excess of
net assets acquired. as follows:
(i) Cost in excess of net assets acquired, net
a) Amount included in Assets Held for Sale................ $ (270,113)
b) Taxes, Transaction costs and other..................... 31,008
--------------
Adjustment to cost in excess of net assets acquired $ (239,105)
==============
July 1, to January 1,
December 31, 2000 to
1999 June 30, 2000
-------------- ---------------
(ii)Total decrease in amortization of cost in excess of net
assets ($239,105 / 40 years).............................. $ 2,988 $ 2,988
============== ===============
(14) Represents the income tax effect of the pro forma adjustments.
as follows:
July 1, to Six months
December 31, ended
1999 June 30, 2000
-------------- ---------------
Total adjustments $ 57,552 $ 58,161
Less goodwill adjustments (2,988) (2,988)
-------------- ---------------
54,564 55,173
-------------- ---------------
Tax effected at 39% federal, state and local income rate 21,280 $ 21,517
============== ===============